C&W is to acquire 100% of KeyTech’s outstanding share capital, under a proposed deal that values each KeyTech share at BMD 17 ($17), giving the deal a value of BMD 205m ($205m) in cash. This represents a 35% premium of the shares over the 30-day weighted average closing price of KeyTech.
The deal is subject to due diligence and regulatory approvals, as well as KeyTech board and shareholder approvals.
C&W has been the primary provider of international telecommunications services in Bermuda for over 115 years, the carrier said in a statement. Indeed, the Caribbean operation makes up the bulk of C&W’s international business, and is the main driver of the group’s total earnings. In the last fiscal year, it contributed annual operating profit of 315m pounds ($590m), on sales up 8% at 1.21bn pounds ($2.27bn).
KeyTech itself is a telecom holding company focused on the Bermuda market. It is made up of Bermuda Telecom Company Ltd, M3 Wireless Ltd, Logic Communications Ltd, and Bermuda Yellow Pages Ltd. In its last fiscal year ending March 31, 2006. it posted net income of BMD 11.7m ($11.7m) on revenue of BMD 98.9m ($98.9m).
Over the years C&W has sold off many of its international operations, including a highly prized asset in Hong Kong, as well as operations in the US and Japan. Currently, C&W is restructuring its struggling UK operation, and in June announced it was looking to offload its consumer-facing internet service provider, Bulldog.
Meanwhile, the company has faced criticism recently over a generous remuneration scheme to pay its senior management a controversial bonus scheme of 220m pounds ($414m), at a time when it is axing over half of its UK workforce over the next five years as well as cutting its UK customer base.
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